Hacker News Reader

Comment by piokoch | Hacker News Reader

Salary transparency. Let's imagine you have a brilliant employee, you want to pay her or him twice more than others, because that person truly brings that much value for your company. Do you really think other employees would say - yes, this guy/gal is really smarter than we are, she deserves all those money? Wouldn't such person be bullied by others (think of what often happens to the best pupil in the class, where you have "grades transparency").

Let me cite François de La Rochefoucauld, "Although no one is happy with his fortune, but everyone - with his wits.

View on HN

We already see it working well with professional sports; salary differences of professional athletes on the same team are absolutely humongous; yet Tom Brady doesn't get bullied for making more than his teammates. Better yet, other football players can look at Tom Brady's salary and know what they have to do to get a similar salary.

Everyone knows they make less than their boss, yet people don't bully their boss. Nurses know they make less than doctors, but they don't bully them. Adjunct professors don't bully full professors. So we can "handle" non-transparent pay when its built into job duties and titles, so it's not that much of a stretch to extend it to employees with similar job duties and titles.

The government sector already has transparent pay and ~17% of private companies have transparent pay, yet we don't see bullying there.

In fact, some preliminary research suggests employees feel more valued and feel their pay if fairer when there is pay transparency. When people don't know what their colleagues are making they tend to assume they are being underpaid.

If you're seeing mass bullying then you've got a problem that can't be solved simply by hiding salaries.

>think of what often happens to the best pupil in the class, where you have "grades transparency"

What? What happens to them? They get to speak at graduation?

The vast majority of adults are mature enough to understand that different people have different work outputs, different value to the company, and therefore have different salaries. We also are mature enough to understand that tenure and seniority are rewarded. We already accept that people get promotions at different intervals, and we already accept that only one person gets the "employee of the month" parking spot and spot bonus.

In sports, it is always fairly clear who contributes to a win, and to what degree.

In my experience, business do a horrible job of measuring performance. It's 95% subjective.

It's only been the last 5-6 years that baseball has really looked objectively at "what contributes to a win". Most front offices now use that information, but as of 6-7 years ago, it was not at all clear.

Teams pay salaries based on market price, not what actually contributes to wins. In an efficient market, these correlate, but sports contracts are by no means efficient.

The Padres' handed $144 million last winter to Eric Hosmer, who never projected to be much above average. There's still a ways to go.

Salary is a poor measure of performance because there's no salary transparency so nobody can negotiate their salary effectively!! It's a tautology! A self fulfilling prophecy.

Athletes get paid based on market rate, past performance, future potential, and a whole bunch of other factors (union agreements, budget, need, fan preference, health, cost of living, etc., etc.) they are not paid based on "contribute to win rate."

It's just like every other employee though. Lawyers probably don't contribute to the company's success more than the engineers, but lawyers are paid more because of the market rate.

In fact, since athletes have long term contracts that specify their pay no matter how well they play, and indeed, even if they play at all, their pay is even further removed from current performance than most other employees. It's not uncommon for an athlete to not play an entire season and still make millions of dollars, it's what fans called "dead money." Bobby Bonilla hasn't played baseball in the last 15 years yet he was paid $1.19 million this year by the Mets. That's twice as much as Jacob DeGrom was paid, who is a Cy Young finalist. Objectively Jacob DeGrom contributed to more wins than Bobby Bonilla.

Take a look at Rusney Castillo, he's being paid $72.5 million to pay minor league baseball. No minor leaguer is worth $70+ million. However, it's financially advantageous for the Red Sox to keep him in the minor leagues due to the luxury tax, so he remains overpaid.

https://www.bostonglobe.com/sports/redsox/2018/03/10/contrac...

So... I think rehotorical examples and reasoning are overused, in co texts like these. Ie "how would imaginary person X react if..." People are emotionally complicated and adaptive. Better to loon at real examples.

Luckily there are plenty. Salary transparency exists in all sorts of markets. Many US universities and public services publish. Finland and other Nordics have a lot of salary/tax transparency.

One really to interesting (to me) example is professional sports. Interesting because (a) sports has massive be pay discrepancies, to your point and (b) salary transparency is generally and employee/union "demand*. It's a demand for the reasons discussed here, transparency resolves an information discrepancy and improves athlete's negotiating position.

For US boxing there's a law mandating purse transparency, the Ali act. It was put in place to help boxers Vis a visit "promoters."

Apart from equalising negotiating positions somewhat, transparency will probably have other, hard to guess effects.

I wonder if the Finnish initiative has had any effect on market salary disrepencies, generally.

If you have someone worth twice as much as your other employees at the same level, then you can promote that person or perhaps figure out why your other employees aren't as productive.

I don't see why such a situation should need to affect salary transparency. It's also useful for employees to know the standards required to earn more.

This is the correct answer in theory, but in practice, I've never seen a company that was very good at paying/promoting people based on output.

It is difficult enough to measure output, especially when there's often many issues around politics and luck-of-the-draw for project assignments. Compound this with the fact that employees don't always scale with the company, or contribute at a high-level when promoted.

And yet people still earn salaries regardless of our ability to accurately gauge output. A salary is our most useful estimation of output. If salaries were known, people could look at their colleagues and say, "well, I think I'm more productive than they are, so I should be paid more", and take that to their manager, who can then counter with "actually, here's our point of view on your colleagues' productivity, and what we would expect from you in order to give you a promotion".

This is a modestly effective weapon against pay that is based on internal politics (e.g. nepotism), because it forces managers to explain pay disparities in a way that employees can at least somewhat validate.

IOW, if the boss wants to pay his worthless nephew more to sit around and do nothing, employees who recognize that he does nothing can effectively challenge their boss to either admit that they should be paid more, or alternatively lie to their faces in order to justify the nephew's salary, which, IMO, is a great excuse to begin seeking employment elsewhere.

I agree in principle - but the hypothetical was about someone who was (presumably measurably) worth twice as much as other employees.

I agree that it's difficult to measure productivity / output - but it's by no means impossible - and sharp discrepancies in productivity between employees are often highly noticeable anyway.

We have had grades transparence in both elementary and high school and good grades were not grounds for bullying. Most kids did not care about your grades at all, one way or the other. I would also argue that when there are large differences between salaries of people on similar positions, in most cases it is result of negotiation skills and random (e.g. nepotism or friendship base or I feel bad about telling no until money run out) decision making on the side of management. Because otherwise manager could explain and qualify which duties make difference and possible motivate others to learn same duties.

Interesting how Finland is handling this. I think taxes payed by person can bee looked up() and from that you can infer how much one earns. Basically making everyones salary public.

() might be wrong here.

I think that for the most part income is directly available in Finland, you don't need to infer.

I'm not sure about the details though.

I’d rather have it that way than at my last company, where I discussed salary with someone of lesser education and talents, but who was female. She found out I was making more due to my education and negotiation, then she went complaining to all of my bosses and HR about a gender pay gap, and come Christmas time she got a raise much larger than mine so we were making the same. Even though she didn’t negotiate and had no masters.

How is that fair to me as someone who arguably deserved the higher salary? I knew more and played the market game better, yet because of my gender I then make the same as a less productive worker?

Salaries should be transparent and the reasons for higher pay should be merit based. I left that company immediately afterwards because another one offered me 50% more to do what the first company wasn’t even thinking of doing yet. So overall, I think the current system of secrecy and unjustified numbers is far from ideal.

> complaining to all of my bosses and HR about a gender pay gap

That is negotiating.

No, it's not. It's a lightly veiled threat.

Diplomacy by other means.

> I knew more and played the market game better, yet because of my gender I then make the same as a less productive worker?

Sounds like you didn't play the market game as well as she did after all.

If you got a job paying 50% more then it looks like your old company was underpaying both you and your female coworker. Could very well be they were paying her less due to her gender as they appeared to value your work equally with hers.

Are CEOs being bullied? Everybody knows they make an order of magnitude more.

Well, if you bully your CEO you're on the good path to getting fired immediately.

Reply on news.ycombinator.com